Simple Price Action Strategy Using Pin Bars

Simple Price Action Strategy Using Pin Bars

Simple Price Action Strategy Using Pin Bars

Simple Price Action Strategy Using Pin Bars

There are many ways to trade price action, some complicated while some are simple. The Pinbar is one of the ways to trade forex based on a very simple price action strategy principles. Not only is the Pinbar price action simple to trade it is also very effective. Beginners to forex trading and more importantly, price action trading, will find the Pin bar price action setups to be a relatively easy way to learn to trade without any indicators. For the advanced or experienced traders, the Pinbar rejections can be used to enhance their trading strategies as well, including strategies that involve trading with indicators.

This is the Price Action Strategy that Professional Traders use to get into positions early.

What are Pinbars?

Pinbars in forex price action go by names including pinnochio bars. They are identified by a small body in comparison to the range and often leave long wicks. Pinbars are not to be confused with other price action candlestick patterns such as long legged doji, dragonfly doji. In some cases, a hammer, hanging man, shooting star also qualifies as Pinbars. Regardless of what name the price action set up goes by, traders should simply focus on candles that have a small body in relation to long wicks.

When the Pinbar patterns occur, it signifies rejection of prices and a short term reversal. They are more valid and important especially when Pinbars occur at key support/resistance levels or even at the pivot levels.

The chart below illustrates a simple or a basic Pinbar pattern.

Pin Bar Patterns Pinbar Patterns 

How to Trade Pinbars Price Action

There are different ways Pinbars can be used for trading and it is this flexibility that makes it a versatile price action set up that is easy and efficient.

Pinbar Reversals: Pinbars work off the premise that when they occur at the top or bottom of a sustained trend they signal a short term reversal or a correction. The chart below shows simple Pinbar reversals when they occur at the top and bottom of the short term trends in the market.

Pinbar Reversal Patterns
Pinbar reversals on chart – Tops and Bottoms

Pinbar Reversals with Stochastics: Although not purely price action, the Pinbar reversals can be traded with more confidence when using the Stochastics oscillator. The buy and sell signals triggered on the Stochastics oscillator can be taken with more confidence when there is confluence with the Pinbar being formed at the reversal as well. The next chart below shows an example where the Pinbars that are formed along with a confirmation from the Stochastics moving from the OB/OS levels can trigger great risk/reward set up based signals.

Pin Bar Reversal with StochasticPinbar Reversals with Stochastics

Pinbars as Support/Resistance: Another simple way to trade with the Pinbars is to use the price rejection levels as support/resistance. Simple plot two horizontal lines on the low (or the high) to the close (or open) price and trade based off prices react these levels in the future. To illustrate this, the first chart below shows the support/resistance levels that were drawn off using the Pinbar.

Using Pin Bar to Identify Support and ResistanceUsing Pin Bar to Identify Support and Resistance – Example 1

After quite a few bars, we can see that the initial range that was identified using the Pinbar has played an important role in terms of acting as support/resistance offering a great level to take trades or simply can be used as reference points for future price action.

Using Pin Bar to Identify Support and Resistance - example 2

Using Pin Bar to Identify Support and Resistance – Example 2

Pinbars  Price Action is simple to learn and trade. It’s a truly Simple Price Action Strategy

As illustrated in the above examples, Pinbars are simple candlestick patterns that can be used to trade effectively. Their simplicity combined with their efficiency makes trading with Pinbars a very simple approach to trading forex price action. Given their flexibility, Pinbars can also form an integral part of an existing trading strategy and can be used to enhance better trade set ups.

To learn more on Price Action, click here.

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